Raymond James' Saut Thinks Investors Are 'Profoundly Underinvested' In Stocks

The Dow Jones Industrial Average is once again flirting with the 21,000 level, and last week's triple-digit sell-off appears to be a distant memory. Should the stock market hold on to its near-term momentum, investors could see their stocks hit new all-time highs. Unfortunately, there are many investors and individuals who will be watching the market hit new highs from the sidelines.

Speaking as a guest during a recent CNBC "Trading Nation," Raymond James Chief Investment Strategist Jeffrey Saut explained that many investors had assumed that President Trump's 2016 election win and the immediate 800-point sell-off in the Dow futures scared away many investors who assumed a selloff would soon follow.

Plenty Of Room Ahead For Growth

But investors who missed the early stages of the "Trump rally" could still profit. Saut argued that the current market has transitioned from an "interest rate driven secular bull market" to an "earnings driven secular bull market." In fact, he believes earnings will continue to favorably surprise investors to the upside, and valuations are "not all that skewed based on that earnings growth."

Saut went on to suggest that the market's next notable catalyst would be tax reform from the White House.

"We're trading around 18 ½ times this year's earnings," he said. "If we do get corporate reform, Thomson (One) suggests that for every 1 point drop in the corporate tax rate, it hypothetically adds a $1.31 to those earnings."